OIL: Crude Backwardation Softens Amid China Demand and Market Surpus Risks

Prompt crude time spreads remain strong suggesting the tight near term reflected in the recent US crude stock draws. Longer dated spreads are however falling this week as China demand concerns, OPEC plans to gradually return some supplies from Q4 and the risk of a market surplus next year are weighing on markets.

• The prompt Brent spread has drifted down from a high of $1.27/bbl on July 18 to $1/bbl but remains above levels around $0.8/bbl seen in early July and from near parity in early June.
• The Brent Dec24-Dec25 spread has falled to the lowest since June 17 at $4.14/bbl having declined from a high of $5.69/bbl on July 5.
• OPEC+ delegates expect the group’s monitoring session on August 1 to review the market is unlikely to recommend changing the groups output policy.
  • Brent SEP 24 up 0.4% at 82.75$/bbl
  • WTI SEP 24 up 0.4% at 78.69$/bbl
  • Brent SEP 24-OCT 24 up 0.06$/bbl at 1.02$/bbl
  • Brent DEC 24-DEC 25 up 0.01$/bbl at 4.13$/bbl
  • WTI SEP 24-OCT 24 up 0.05$/bbl at 1.12$/bbl
  • WTI DEC 24-DEC 25 up 0.03$/bbl at 4.62$/bbl